Financial analysis Flashcards
benchmarking
motivates employessd and helps managers evaluate performance, comparing a comany with its prior performance or with best practices from other companies
participative budget
those who are directly impacted by a budget are involved in the development of the budget
Budgetary slack
managers intentionally understate expected revenues or overstate expected expenses
zero-based budget
all revenues and expenses must be justified for each new period. The previous year’s actual results are ignored
strategic budget
long-term financial plan used to coordinate the activities needed to achieve the long-term goals
operational budget
short-term financial plan used to coordinate the activities needed to achieve the short-term goals
continuous budget
operational budget that involve continuously adding one additional month as each month goes by
static budget
only one level of sales volume
master budget is a static budget, so it is prepared for only one level of sales volumes
flexible budget
for various levels of sales volume.
separate variable costs from fixed costs
the variable costs put the flex in the flexible budget
master budget
set of budgeted financial statements and supporting schedules for an entire organization
operating budgets
set of budgets that projects sales revenue, cost of goods sold, and selling and administrative expenses, all ow which feed into the cash budget and then the budgeted financial statements
capital expenditure budget
presents company’s plan for purchasing long-term assets
financial budget
includes the cash budget and the budgeted financial statements
cash budget
details how the business expects to go from the beginning cash balance to the desired ending cash balances
GOGS how to calculate
beginning inventory + purchases - ending inventory
purchases how to calculate
Gogs + ending inventory - beginning inventory
budget performance report
report that summarizes the actual results, budgeted amounts and the differences
variance
the difference between an actual amount and the budgeted amoun
static budget variance
difference between actual results and the expected results in the static budget
to create flexible budget you need:
budgeted selling price per unit, budgeted variable cost per unit, total budgeted fixed costs, different levels within the relevant range
flexible budget variance
difference betwee actual results and expected results in the flexible budget for actual units sold
sales volume variance
difference between expected results in the flexible budget for the actual units sold and the static budget
standard
is the price, cost or quality that is expected under normal conditions
standard cost system
is an accounting system that uses standards for product costs
cost variance
measures how well the business keeps unit costs of material and labor inputs within standards
cost variance how to calculate
AC-SCxAQ
efficiency variance
measures how well the business uses its materials or human resources
efficiency variance how to calculate
AQ-SQxSC
manyfacturing
overhead
valmistus kustannukset
manyfacturing
overhead
valmistus kustannukset
overhead allocated to production
standard overhead allocation rate x standard quality of the allocation base allowed for actual output
fixed overhead volume variance
Fixed overhead cost standard x (direct labor efficeincy standardxpaljonko tuotetta tehtiin
management by exceptions
occurs when managers concentrate on results that are outside the accepted parameters
sunk costs
costs that were incurred in the past and cannot be changed
differential analysis
short-term decisions: regular and special pricing, dropping unprofitable products and segments, product mix, and sales mix, outsourcing and processing further
price-taker
with little control over pricing.
company is price taker when:produvt lacks uniqueness, intense competition, pricing approach emphasizes target pricing
price-setter
more control over pricing.
product is more unique, less competition, pricing approach amphasizes cost-plus pricing
target pricing
starts with the market price of the product and then subtracts the company’s desired profit to determine the maximum allowed target full product cost
revenue at the market price - desired profit
cost-plus pricing
starts with company’s full product costs and adds its desired profit to determine a cost-plus price
full product cost + desired profit
outsourcing
ulkoistaminen
gross profit marigin
net sales-GOGS/net sales
gross profit:
net sales-COGS
weighted-average method
keskiarvo
cost of goods available for sale/number of units available
inventory turnover
COGS/average merchandise inventory
average merchandise inventory
beginning inventory + ending inventory/ 2
High-low method
1.Variable cost per unit: laske ylin-alin hinta / ylin-alin kpl määrä
- total fixed cost:
ylin hinta - (1. step x ylin kpl määrä) - total mixed cost:
- step x annettu kpl määrä + 2. step
contribution marigin
paljon rahaa on saatu myymällä- paljon rahaa on menny variable costiin
revenue-variable cost
unit contribution marigin
paljon yks on myyny- paljon yhen tekemiseen on menny
price-COGS
contribution marigin ratio
jaetaan unit contribution marigin net sales revenue per unitilla. eli sillä paljolla yks kpl on myyty
the equation approach
net sales revenue x X -variable x X - fixed cost=0 tai jos halutaan päästä tiettyyn summaan nii se summa. Mutta ratkotaan siis x
contribution marigin approach
fixed cost + target profit / contribution marigin per unit
contribution marigin ratio approach
fixed cost + target profit /contribution marigin ratio + fixed cost
kertoo dollareina
marigin of safety
mikä on break even pointin ja expected salesin välissä
marigin of safety kappalaissa
expected sales-breakeven sales
marigin of safety dollareissa
marigin of safety in units x paljonko yks kpl maksaa
marigin of safety prosentteina
marigin of safety in units / expected sales in units
degree of operating leverage
paljonko yritys voi nostaa operating incomea nostamalla revenueta
lasketaan: Contribution marigin / operating income(fixed cost)
